Interview with the executive director of the Bulgarian-Romanian Chamber of Commerce and Industry on the influence of the present crisis on Bulgarian-Romanian economic relations, on the social-economic measures against the crisis of the governments of these two countries and on the infrastructural connectivity between them
Eleonora Ivanova – executive director of the Bulgarian-Romanian Chamber of Commerce and Industry is related to the chamber since its foundation in 2003, when 30 leading Bulgarian and Romanian companies recruited her as an expert. She had to help with the institutional establishment of the specialised employers’ organisation. She became the executive director of the chamber immediately after its establishment. Over the years she laboriously expanded the team and the activity of the Chamber, transforming it into a recognised business community.
Eleonora Ivanova obtained a M.A. in Finance and Banking from the Economic Academy of Svishtov, and later specialised Finance and Managerial accounting in the University of Wales, Great Britain. She has a five-year professional experience in banking and over 20 years as a consultant in business development. In the present she manages successfully her own consulting company.
How does the crisis, caused by COVID-19, influence the BRCCI’s members and the Bulgarian-Romanian economic relations?
The situation, in which we woke up in, was not foreseen, awaited or planned. Every organisation does its annual plans and takes into account the potential risks, but the pandemics were not one of these risks, which we took into consideration. We were stressed by the dimensions of the health risk, but also by the economic consequences of the borders’ closure, the barriers to travelling, the stop of production.
These processes influence our organisations, its members and the economic relations between the two countries. We withdrew physically, but continued to speak. A part of the companies managed to reform themselves and to continue to restructure their production. Others stopped for some time. The physical barriers to movement influenced negatively the business and at the moment we are still in a situation, in which it is difficult to prove that we see light at the end of the tunnel.
During the coronavirus crisis there were not great turbulences of the supply chains between Bulgaria and Romania. There were no serious signals for problems neither at the chamber, nor in the commercial department of the Bulgarian embassy in Bucharest. Of course, there were difficulties, but they were due to the closed border and the impossibility that the Bulgarian managers traveled to Romania. During the crisis they had to look for local, Romanian partners, who were to manage their companies.
Another problem, which was caused by the lack of physical access, was the impossibility of work teams, who have signed contracts for doing services in Romania to travel to the places, where they had to work.
The mutual indebtedness between the firms exists both in Bulgaria and Romania. It increased during the crisis. Some of the firms had to withdraw their goods from the warehouses of their distributors, so that the losses for the business are reduced.
Would you review and analyse the basic social-economic measures against the crisis in Bulgaria and Romania? Which are the more effective measures from the standing point of the economy’s relaunch, after there was a temporal plunge of both the demand and the supply? Which countries manage to more effectively stimulate the sectors in the crisis?
Even in the first days from the announcement of the state of pandemics, the Romanian government accepted a set of measures, through which it supported the local business in order to deal with the consequences of the coronavirus. The measures were published on 22 March 2020 and they foresaw the prolonging of the deadlines for tax payment with reduced rates, the possibility that small and medium enterprise, which have stopped their activity completely or partially and have a certificate for the state of emergency, to postpone the payment of the utilities or of the rents for the headquarters and for the secondary offices of the firm. There was also a possibility for renegotiation of the clauses of the treaties, according to the emergency situation and payment of compensation, because of the temporary halt of activity (technical unemployment).
In its turn the Bulgarian government also signed a number of measures, which were entering in force gradually. In the beginning of the regime 60:40 was not accept sufficiently well, but after that a number of firms used the possibility to keep their personnel as the state took over a part of the social securities payment.
The most discussed measure in Romania was the possibility for interest-free credit, while in Bulgaria the state decided to support the microfirms by giving them 10 000 direct subsidy.
At this stage no one can comment which country has dealt better with the crisis and which measures are more effective. What matters is that the government managed to react and do what they can, so that the business doesn’t stop completely. Given that these measures are still in force, an analysis can be made only after the crisis goes away.
BRCCI is interested in the infrastructural connectedness in Bulgaria and Romania. How does the chamber evaluate the condition of the cross border connections in their concrete dimensions: the discussions on the third bridge, which was declared to be at Svishtov-Zimnicea, but for one year there has been silence on this issue; the road connections to the two present bridges; the conditions of the ferry boat connections. What is the BRCCI’s vision on the development of the infrastructural relations between the two countries and what advice do you give to the government of the two countries on this issue?
Yes, the Chamber is interested in the interconnectivity between the two countries. We believe that the more bridges and ferryboats exist, the more business and people will be satisfied. As far as the bridge between Svishtov and Zimnicea is concerned, we were not consulted before the announcement for its intended construction. We made a study among our members and their opinion formed our position. Namely, we believe that the more possibilities for physical connection between Bulgaria and Romania exist, the better.
There must be more connections – both bridge connections and ferryboat connections. Romania is the second largest commercial partner to Bulgaria. This must be a signal that the bilateral business exchanges grow. Also, through the insufficient ferryboat connections and the bridges passes serious car and freight truck traffic, which continues to Turkey.
We should not forget that the Danube is also a transport corridor. It is a road, which has to be used. The Bulgarian-Romanian chamber works actively in this regard too. We want to ease the ship navigation. We communicate actively with the ship transport sector, with the stakeholders, with the respective ministries and we have our small successes.
BRCCI manages a cross-border labour office – the Visa Agency. Business is mobile, it has capital and sees the opportunities at the neighbours. To what extent do workers and employees see their economic interest and sense in the work in the neighbouring country? What impedes the labour mobility between the two countries?
At this moment cross-border labour mobility is reduced to minimum, because of the barriers, imposed by the coronavirus. However, travelling is possible in some cases and those Bulgarians, who work in Romania do it. But as a whole, the barrier to labour mobility is first of all the people’s mentality on both sides of the border, which is directly linked to the sedated way of life and way of work. The language barrier is also difficult to pass. It is a fact that Bulgarians have greater expectations from the labour market in Romania, while Romanian employers are not willing to pay higher for the labour of their potential Bulgarian employees. The truth is that the people have difficulties to deal with the language, with the mentality of their neighbours, they just don’t know the neighbours.
Which are the main obstacles, which the Bulgairan business in Romania confronts? How do the fiscal innovations in the period 2015-2019, the Romanian leu’s devaluation and the strong competition on the Romanian market influence it?
The Bulgarian firms face different problems in Romania. Some of them are the dimensions of the market, the high competitions, the language barrier and its price sensitivity.
The Romanian market is one, which requires investment. In order to develop its business there a Bulgarian company should be stable in Romania, to be resilient, to have the time and the resources to wait for a suitable moment. The companies’ experience shows that the Romanian market is opening step by step. Sometimes firms should work without profit, before seeing the chance to reveal their strengths to Romanian clients and partners. After they become recognisable, the companies face the problem of the market’s volume – sometimes they don’t manage to satisfy the demand, can’t meet up all the orders, which they have received. It is an important issue and things have to be calculated with precision.
Most firms, which are successful in Romania, have needed one, two or three years, in order to settle there. For others, which have become leaders in some of the segments of the Romanian market, seven years were necessary. Most firms and real life confirm those time needs.
What does the present crisis change for the economic relations and for the international situation of Bulgaria and Romania? What does BRCCI do in order to develop the Bulgarian-Romanian economic relations in the present circumstances?
The pandemics hit the economic relations between the two countries, which are traditionally good. It reduced the volume of trade. The forecasted growth of the GDP in the two countries didn’t happen. On the contrary, the economy slowed down and in a given moment it almost stopped. Firms changed their priorities. They still wait, in order to predict how the economic processes after the pandemics unfold.
The situation with the coronavirus on global scale broke the supply chains and it turned out that the far-away industries in Asia are not a good option now. Gradually, the European companies start to think about moving their plants from Asia back to our continent and our two countries have a chance – to attract investors and to become an attractive nearshoring destination.
BRCCI has been trying to restructure the services it provides to the firms members and to the companies, which have interest towards the Romanian/Bulgarian market. We made a lot of online events and we never ceased working. The companies accustomed themselves to online communication. It was useful both for them and for us. At one of the events, at which Bulgarian managers, who were working in Romania, shared their experience and answered questions, we had more than 70 companies, which participated actively in the dialogue. It would have been impossible in an offline environment. Thanks to the new technologies we gathered very good speakers and interested listeners from different places in Romania and Bulgaria.
Our evaluation is that we managed to overcome our own border in the times of pandemics. Our real meetings became virtual. We learned to think outside the box. We assured ourselves that we could work with efficiency without staying eye-to-eye with our clients. We created new possibilities. We never ceased to support the companies on their road to success!
Photo: Eleonora Ivanova (source: YouTube)
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